October 2011 Financial Security Index » Overview
Penny pinching is America's new pastime, but one sacred spending area may be non-negotiable: the gratuity. A new survey by Bankrate.com has found that 70 percent of Americans report their tipping habits have not been affected by the economy.
Only 9 percent of Americans tip more out of sympathy for struggling service providers, but 16 percent report they are now tipping less because money is tight, according to Bankrate's latest Financial Security Index.
Unsurprisingly, people with the least amount of income are squeezing their tips the most. Nearly a quarter of people earning less than $30,000 per year said they have cut back on tips, as opposed to 9 percent of the highest-income earners -- those raking in more than $75,000.
Percent or dollars?
Americans may believe they are tipping as generously as ever, but that may be due to the way most people think about tips -- in terms of percentages rather than dollars.
"What's interesting is that roughly 80 percent of the country thinks about tipping in percentage terms and then about 20 percent thinks about it in dollar terms," says Michael Lynn, professor of consumer behavior and marketing at the School of Hotel Administration at Cornell University.
The standard 15 percent tip may be the same in the mind of the diner, whether it's a $150 meal or a $25 two-for-one special, but it's vastly different on the receiving end.
"People could say, 'No, I'm not tipping less because my percentage is the same,' but the servers are getting less because the bill is a lot smaller," says Lynn.
That's a development noticed by former waiter-turned-writer, Steve Dublanica. The author of the Waiter Rant blog, the eponymous book and his most recent book on tipping, "Keep the Change," has found that most people trim down the extras when trying to be frugal. That, in turn, affects the gratuity.
"When I was waiting tables in 2005, I had couples come in and buy $200 bottles of wine. Then as the recession started to hit, the same couples would start ordering less -- maybe a $50 bottle of wine. So the effect of that is that while the tip percentage has not changed, the bill has gotten smaller, the tip has gotten smaller and waiters have to work more to make the same amount of money," Dublanica says.